(PUB) Investing 2015

13

September 2015

Morningstar FundInvestor

Clipper on the Rebound Leaders & Laggards | Robert Goldsborough

gory peers through strong stock selection, including making winning investments across a variety of sectors, including UBS UBS , Sanofi SAN , Nestle , and BT Group BT .A.

Laggards FPA Capital FPPTX

Leaders Clipper CFIMX Clipper, with a Morningstar Analyst Rating of Bronze, continues to turn a corner, particularly since it underwent a comanager change at the start of 2014 . This concentrated, financials-heavy fund has topped 97% of category peers since the start of 2015 through strong stock selection. In particular, it has benefited from its position in Amazon.com AMZN , whose stock has soared this year amid reports of expanded profitability and dramatic growth in its Amazon Web Services segment. Other key holdings that have delivered outsize performance this year are Google GOOGL , Bank of New York Mellon BK , Markel MKL , Charles Schwab SCHW , and UnitedHealth UNH . DoubleLine Total Return Bond DBLTX Manager Jeffrey Gundlach continues to shine as he has steered this large mortgage-focused bond fund to an impressive long-term record. The fund has bested 99% of its peers over the past five years and 98% of its peers since the start of the year. Helping to drive performance in 2015 ’s first half were the fund’s investments in credit-sensitive, nonagency residen- tial mortgage-backed securities. Some government agency RMBS —specifically, inverse interest-only bonds—have done well. The fund carries the Not Ratable designation owing to DoubleLine’s unwilling- ness to provide the information needed to issue a Morningstar Medalist rating. Fidelity Overseas FOSFX This Bronze-rated international-stock fund has returned an impressive 7 . 2% since the start of the year, weath- ering the August market downturn well. As a result, it has topped 99% of its foreign-stock peers this year. Manager Vince Montemaggiore has guided this fund to strong performance since taking over in January 2012 , with category-leading, three-year annualized returns of 12 . 9% . Montemaggiore has topped his cate-

Currently mired in a slump, Bronze-rated FPA Capital can be expected to see its performance deviate widely from other funds, as it invests without much regard for sector diversification in a handful of mid- and small- cap stocks at deep discounts. Over the past several years, this fund has felt pain from hoarding a large cash stake during a rising market and taking a large stake in energy stocks at a time that oil prices have tanked. Energy firms haven’t been the only detractors, however. The fund also has been hit hard by positions in for-profit education companies like Apollo Educa- tion Group APOL and DeVry DV , which have struggled amid regulatory scrutiny, profit pressures, and even unfavorable demographics, as a low birth rate means fewer high school graduates in the near term. Loomis Sayles Investment Grade Bond LIGRX This Gold-rated, intermediate-term-bond fund often takes a bargain-hunting, corporate-heavy approach to identifying investment-grade debt and has broad flexibility to invest outside the United States and in non-U.S. dollar-denominated fare, including both sovereign and corporate debt. Its contrarian approach has served the fund well over the long term, as the fund has generated stellar five- and 10 -year perform- ance. Since the start of 2015 , however, the fund has struggled, owing to its stake in non-U.S. dollar curren- cies, with bonds denominated in Canadian, Australian, and New Zealand dollars being especially hard-hit. Also weighing on the fund has been major declines in one of the few common stocks it holds, Corning GLW . Artisan International ARTIX Silver-rated Artisan International has lagged fully 98% of its foreign-stock peers since the start of 2015 amid a 5 . 7% decline. Among the culprits are an above- average stake in China, including a large position in the beleaguered Baidu BIDU , which is down 35% for the year, and in other names like Grupo Televisa TV , Toyota , and ASML Holding ASML . K

Ten Best-Performing Funds

Fund Name Fairholme

YTD Cat Rank %

1 Fairholme Focused Income 1 Fidelity Overseas 1 Scotia Dynamic U.S. Growt 1 Sequoia 1 T. Rowe Price Capital App 1 T. Rowe Price Global Tech 1 T. Rowe Price Health Scie 1 Thornburg Value A 1 ASTON/Montag & Caldwell B 2

Ten Worst-Performing Funds

Fund Name

YTD Cat Rank %

Longleaf Partners

100

Delafield Fund

99 99 99

GoodHaven

Loomis Sayles Investment Royce Special Equity Mult 99 AMG Yacktman Focused Serv 98 AMG Yacktman Service 98 Artisan International Inv 98 FPA Capital 98 Janus Contrarian T 98